THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

(BEGIN VIDEOTAPE) ANNOUNCER: The stem cell research moves to the Senate, and some Republicans sound ready to follow the lead of the House and break with the president.

UNIDENTIFIED MALE: If it really comes down to a showdown, we will have enough in the United States Senate to override a veto.

ANNOUNCER: We're tracking all the showdowns on the hill, including the final round in the battle over John Bolton.

The real deal on President Bush's choices for the bench. Was the near meltdown about power here, or power here?

Women in combat. Should Congress tighten limits on females in the line of fire? There's new action on that front.

Now, live from Washington, Judy Woodruff's INSIDE POLITICS.

(END VIDEOTAPE)

JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us. Members of the Senate moved onto other battlefronts today, not nuclear territory perhaps like the averted meltdown over judges, but the issues at hand still generate plenty of political heat. Stem cell research and John Bolton's nomination to be ambassador to the United Nations.

JOE JOHNS, CNN CONGRESSIONAL CORRESPONDENT: Hi, Judy. The issue of stem cell research back on the front burner today now that the House has passed a bill that the president has threatened to veto. A bipartisan group of senators came out today in strong support of the House legislation, including some influential Republicans. Key among them, Senator Arlen Specter of Pennsylvania, who himself is battling cancer right now, offering some intensely personal perspectives on why he thinks this legislation should go through the Senate.

(BEGIN VIDEO CLIP)

SEN. ARLEN SPECTER, (R) PENNSYLVANIA: It is scandalous, absolutely scandalous, that there are so many people with Alzheimers and Parkinson's and heart disease and cancer. Some of them, myself, look in the mirror every day, barely recognize myself. And not to have the availability in best in medical care is simply atrocious.

(END VIDEO CLIP)

JOHNS: But it is just not clear right now where this legislation is headed. Last night on the Senate floor, Senator Brownback of Kansas, who's one of the opponents of the legislation, went out and essentially issued an implied filibuster threat, saying he will do all he can, everything in his power, to make sure this legislation does not reach the president's desk.

(BEGIN VIDEO CLIP)

SEN. SAM BROWNBACK, (R) KANSAS: We should not use taxpayer dollars to fund research on the youngest of human lives. It's wrong, it's not necessary, and it should be stopped. I'm pleased that the president has promised to veto this legislation.

(END VIDEO CLIP)

JOHNS: Now, meanwhile, on the Senate floor right now, the Bolton nomination for the United Nations. That nomination is beginning to look like a moving target again. Last night, some Democrats were saying they thought it would be able to get through the Senate after a long debate, while this morning, Senator Harry Reid, the minority leader, telling reporters he would not rule out the possibility of a filibuster.

In that situation, we have Senator Chris Dodd, also Senator Biden, saying they don't want this thing to go through unless they get certain documents, including NSA intercepts regarding conversations Bolton has apparently had. So they're continuing to insist on that. There are a few Democrats who would like to see this nomination get out of the way. But those two senators right now are refusing to back down -- Judy.

WOODRUFF: Joe, is any of this due to Democrats flexing their muscle after the outcome on filibusters?

JOHNS: It doesn't sound like that. Quite frankly, there are a lot of Democrats apparently who were suggesting they'd like to see this thing off the plate. But the problem is, an agreement has not been worked out just yet with these two senators. You know, in the large picture here, this Bolton nomination has been problematic for a long time. There are a lot of people on both sides of the aisle who listen to that testimony suggesting Bolton was an inside fighter, a bureaucratic in-fighter, who didn't always work well with people. And that's got some of them concerned -- Judy.

WOODRUFF: All right. Joe Johns watching both the stem cell debate and the debate over John Bolton's nomination. Joe, thank you very much.

President Bush clearly has a lot at stake in both of the latest points of contention in the Senate. CNN's Bob Franken is covering the White House for us today. Hi, Bob.

BOB FRANKEN, CNN CORRESPONDENT: Hello, Judy.

And in a town where perception is reality, we are already getting some murmurings about the fact that President Bush might start being considered the lame duck president. Of course, he is in his second and last term. The president went to a hydrogen fuel center, experimental Senate -- center, to make a push for energy legislation that is coming up.

But there is an awful lot of talk now about the Republican defections that Joe Johns just described. His press secretary had a ready answer to those who are saying that the president's invincibility is running out of gas.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: This Congress has been in place since -- for just over four months now. We have made significant progress in the first four months or so of this Congress. The Congress has passed class-action lawsuit reform. The Congress has passed common sense bankruptcy reform.

(END VIDEO CLIP)

FRANKEN: The issue, Judy, as far as the critics, the Democrats and those who wonder if the president is losing that invincibility, is whether he is in the process starting to lose some momentum, what his father called "the big mo" -- Judy.

WOODRUFF: But so far, just a glimmer, right, Bob?

FRANKEN: Just a glimmer, but glimmers have a way of feeding on themselves and becoming a nova star.

WOODRUFF: All right. To mix a metaphor, which we love to do around here. OK. Bob Franken, thanks very much.

Well, the president is applauding the Senate today for approving his long-stalled nomination of Judge Priscilla Owen. Members voted 56-43, largely along party lines, making good on part of the deal that resolved their showdown over judges. Owen's confirmation comes more than four years after she was first nominated by President Bush. Several other controversial judicial nominees are slated to get up-or- down votes under the bipartisan agreement struck in the Senate earlier this week.

Well, Senate leaders of both parties are getting slammed and praised for their handling of the fight over judges. One tough critique of Senate Majority Leader Bill Frist may not do much for his presidential prospects in 2008. The influential "Manchester Union Leader" in New Hampshire published an editorial asking if Frist, quote, "cannot effectively lead 55 Republican senators, how can he be trusted to lead the party and the country three years from now?" End quote.

Minority leader Harry Reid is getting mixed reviews in dueling ads, airing in his home state of Nevada. The spot, by the conservative group Progress for America, asks Nevadans whatever happened to Harry? And a new ad by a pro-Democratic group responds to that question.

WOODRUFF: Those ads are running in Reid's homestate of Nevada. In addition to individual members, Congress overall is not getting very good reviews from the public. A new "CBS News" poll gives Congress a 29 percent approval rating. That is down six points from last month, and at lowest level since 1996. Most of the interviews were conducted before the Senate compromise on judges was announced Monday night.

Is the fierce partisanship on the Hill hurting both Democrats and Republicans? Up next, we'll explore some of the most contentious topics with House Minority Leader Nancy Pelosi.

Also ahead, a strategic retreat on the role of women in the military. Is Congress giving the public what it wants?

And later, something of a blast from the past for Hillary Clinton, as the former Watergate committee staffer faces a potential rival.

(COMMERCIAL BREAK)

WOODRUFF: About an hour-and-a-half ago, I discussed a range of issues with the House Minority Leader Nancy Pelosi. I began by asking her about this week's Senate compromise on judicial nominees. She and other leaders described the deal as a victory. But party chairman Howard Dean told me here, yesterday, he's not sure if it is a victory in the long run because he doesn't know what the president is going to do about Supreme Court vacancies.

(BEGIN VIDEOTAPE)

REP. NANCY PELOSI (D-CA), MINORITY LEADER: Judy, I'm happy to respond to your question, but before I do, I want to thank you for the opportunity for being on the show today. Gives me an opportunity to say to you how much we all appreciate that you are a consummate journalist that is a moderator. You have raised the level of dignity of these political issues that you lead the discussion on, and as a woman, I want to say thank you for being a pioneer and a trail blazer in a very difficult field. I can identify with that, and I really do wish you well in your future endeavors.

WOODRUFF: I appreciate that, very much.

PELOSI: So, as for the -- but I think that that's what a compromise is. People see it in different ways, and I think the chairman is right. There's always -- the majority always reserves the right for the nuclear option. But I think that the fact that minority rights were preserved in this compromise that was arrived at the other day was a success.

WOODRUFF: But some would say Democrats have had to swallow their principles. Democrats were saying these judges weren't fit to serve. Now, most of them are going to be confirmed.

PELOSI: Well, I think the debate on the credentials and the substance of the debate on those judgeships will continue, and I think that the compromise spoke to, when they -- for those who go beyond the pale, that there will be the right to filibuster, to be reserved.

WOODRUFF: The congressional black caucus is calling it more of a capitulation than a compromise?

PELOSI: Well, a compromise has those features. They -- I think the congressional black caucus is justified in its concern about the confirmation of some of these justices-to-be that the president has sent down. They have, some of them, been on record in turning back voting rights, provisions of the act, and there's reason to be concerned.

But again, this is a compromise, and it is one that will enable the Democrats to weigh in, in a very serious way, on those that are just out of the question. So, there won't be so many justices who do not share the value and the principle of equality throughout our society and how that comes down in terms of voting rights and civil rights.

WOODRUFF: Let me ask you about something else, and that is the public perception of Congress, right now. A new poll, CBS poll, has the public giving Congress a 29 percent favorability rating, and they seem to be blaming both parties, saying there is too much negativity, too much criticism. Do you accept some responsibility for that?

PELOSI: No, I don't at all. I think the negative rating of Congress accrues to the majority in the Congress. I do think, though, that Democrats will be out there in a stronger way, challenging the majority and the president to sit down at the table in a bipartisan way to address crises in our country. One of them is the health care crisis. Another is to do what -- invest what we must in making our workforce, our child -- educating our children so we have a workforce for the future, addressing the issue of the deficits, addressing the issue of energy in our country.

These are issues that are of concern in the lives of the American people. We have to be relevant to their lives. But, yes, they paint Congress with the same brush. I accept that. But the responsibility for setting the agenda is with the majority, and we challenge them to bring us all to the table to address the issues of concern immediately to the American people and their families.

WOODRUFF: I also want to raise with you an article in the new "Atlantic Monthly." A senior editor named Joshua Green writes about you and Senator Reid, the leaders for your party. He gives you credit for maintaining unity among Democrats, but then he goes on to say -- he said, if Democrats are going to win back the majority in the Congress, he said, they've got to have the strategic ability to maintain a true opposition movement, and he said they've got to have -- be able to galvanize the public. And he goes on to say he doesn't think either one of you have shown any evidence of being able to do that. What do you say to that?

PELOSI: Well, I certainly beg to differ. As one who has been reading the "Atlantic Monthly" since I was in ninth grade -- I was thinking of that -- I always wanted to have a piece in there. Maybe it will be my letter to the editor.

But, to the point, the -- building unity among the House Democrats and the Senate Democrats is a challenging task. We've achieved that. I think that the Democrats and the Congress in both houses have been largely responsible for taking down the idea of privatization. When this debate started, people though President Bush was a man with fresh ideas called privatization. Now, they think he's a man who wants to cut their benefits. I think that the idea -- the issue of the deficit and its relationship to Social Security is one that we have been successful in galvanizing the public on.

And also on the issue of abuse of power. Why do you think the Republicans folded into a compromise except that the American people saw what they were doing as an abuse of power. Can we do more? Absolutely. I hope the press will give us the opportunity to get our message across, but if they don't, we're on the internet. We're on the road. We're in the -- on college campuses. We're all over to deliver our message to challenge the Republicans, to come together in a bipartisan way for jobs, health care, education and, of course, the safety of our country and do it all in a fiscally sound way and an ethical manner.

(END VIDEOTAPE)

WOODRUFF: Nancy Pelosi, the House Democratic leader.

A fight today in Congress over women in combat. Do you think that females should serve near the front lines? We'll reveal the results of a new poll, when we return.

(COMMERCIAL BREAK)

WOODRUFF: Republicans in the House of Representatives today backed off a proposal that would put more limits on women in combat. The proposal would have required the Pentagon to get congressional approval before opening additional jobs in combat zones to women. Our Bruce Morton looks at the role of women in uniform near the front lines.

(BEGIN VIDEOTAPE)

BRUCE MORTON, CNN CORRESPONDENT (voice-over): Yes, women are in combat. That's Army Sergeant Jennifer Gleason (ph) test-firing her machine gun in a helicopter over Afghanistan. Or take this Iraqi fire fight, on insurgent video. One of the fighters, M.P. Sergeant Leigh Anne Hester.

SGT. LEIGH ANNE HESTER, U.S. ARMY: And immediately we went to the right side of the convoy and began taking fire and we laid down suppressive fire and pushed up in flanks, flanked the insurgents and overcame that day.

MORTON: More than 9,000 women now serve in Iraq and Afghanistan. 35 have been killed in action in Iraq alone. Women can't serve directly in combat units and infantry companies, say, but they come under fire in other ways, flying troops as medics. Units like Jessica Lynch's, a truck convoy which took a wrong turn.

A House Armed Services subcommittee passed an amendment barring women from these forward-support units. The Army said that would close 22,000 jobs to women and it objected.

DONALD RUMSFELD, DEFENSE SECRETARY: I'm not just sitting around waiting. I'm having meetings with them and discussing it.

MORTON: Indeed he was. The Republicans on the Armed Services Committee pulled back and approved an amendment by Chairman Duncan Hunter, leaving the rules as they are and allowing the Pentagon to open or close jobs to women, but giving Congress 60 legislative days instead of 30 to approve or disapprove any changes, more chance for congressional oversight.

REP. HEATHER WILSON, (R) NEW MEXICO: In the history of this country, there has never been a law limiting the assignment of women in the Army, and we will not do so this year.

MORTON: The compromise leaves the rules about where Americans want them. In our latest CNN/"USA Today/Gallup poll, 72 percent said women should be able to serve anywhere in Iraq and 67 percent favored their being in combat areas as support for the ground troops. But serving as ground troops, which they're currently not allowed to do? Our sample narrowly agreed with that. 44 percent said women should be able to serve as ground troops, 54 percent said they should not.

Bruce Morton, CNN, Washington.

(END VIDEOTAPE)

WOODRUFF: Interesting to see how those opinions have evolved and changed over the years.

It has been 11 years since there has been an opening on the Supreme Court, but if Chief Justice William Rehnquist retires this summer, will the fight over his replacement turn into an all-out battle? We'll take a look when we return.

Plus, Hillary Clinton's up for re-election in the Senate next year. So who will take her on? We'll tell you about a potential challenger, ahead on INSIDE POLITICS.

(COMMERCIAL BREAK)

WOODRUFF: We're back now to share with you video from the White House. President Bush meeting with the president of Indonesia, President Yudhoyono. This is the question-and-answer session after. They spoke to the press.

(BEGIN VIDEO CLIP)

QUESTION: ... using them for research?

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: She's asking about a very delicate subject called embryonic stem cell research.

I have made my position very clear on that issue. I believe that the use of federal monies that end up destroying life is not positive. It's not good. And so therefore I'm against the extension of the research of using more federal dollars on new embryonic stem cell lines.

As you know, I made the decision that existing lines should receive federal dollars. And we've had about 600 different experiments, maybe 3,000 more to go.

And so you asked about frozen embryos. That would entail the destruction of life. And the use of federal dollars to destroy life is something I simply do not support.

QUESTION: How about good will for relations for military?

YUDHOYONO: Yes. We discussed with President Bush on the effort in normalizing our military-to-military relations.

Of course, Indonesia has to be thankful for the resumptions of IMET program. And we have to do more, along with the reforms of the military that is conducted in Indonesia. I do hope that, in the future, we are moving ahead for fully normalizations of the military- to-military relationship.

Actually, the atmosphere is positive. And of course, in part of Indonesia we have to continue our reform to do many things toward the normalization of our military relations.

BUSH: Yes, the president did mention that we're revitalizing the military education training program.

It makes sense that we have mil-to-mil exchanges -- military-to- military exchanges. We want young officers from Indonesia coming to the United States. We want there to be exchanges between our military core. That will help lead to better understandings.

And so I -- the president told me he's in the process of reforming the military, and I believe him.

And so this is the first step toward what will be fuller mil-to- mil cooperation.

QUESTION: Again on stem cells, Mr. President: If I understood you correctly, the embryos put together for in vitro fertilization do contain life. And if that's the case, do you believe that those people who create those embryos for in vitro fertilization have an obligation to ensure that they are brought to term if they are, in fact, not needed by the original couple?

PRESIDENT BUSH: No, the issue that involves the federal government is whether or not we use taxpayers' money that would end up destroying that life. That's the issue at hand. And as you know, I'm the first President to say we could use federal dollars on embryonic stem cells, but those stem cells had already -- had been created, so that -- it's from the moment I made the declaration forward that we would not use federal taxpayers' money to destroy life. That's the issue. And the Congress has made its position clear, and I've made my position clear. And I will be vetoing the bill they send to me if it were to pass the United States Senate.

Now, there is research going on in the private sector, there's a lot of research on adult stem cells that appears to be very promising. And my government strongly supports stem cells. There must be a balance -- strongly supports adult stem cell research. But there must be a balance between science and ethics. And I've made my decision as to how best achieve that balance.

QUESTION: We understand that United States has pledged a commitment -- a lot have pledged a commitment to the tsunami relief reconstruction and effort. I would like to ask, how is it going to be realized, the commitment?

PRESIDENT BUSH: Well, the commitment was first realized when we moved an aircraft carrier with a lot of equipment in the neighborhood. And many of our Navy officers and Marine officers and Marine enlisted, Navy enlisted personnel were the first people on the ground to start helping, in coordination with the Indonesian government.

That commitment is further being met by expenditures out of the United States Congress. Plus, I put together kind of an interesting group of private citizens to help raise money for the tsunami relief -- that would be my father and President Clinton, number 41 and 42. And they have worked hard to convince our fellow citizens to contribute -- these are private-sector citizens -- to contribute to help provide relief, as well. I'm proud of my government's -- more importantly, my country's commitment to help the people who suffer. And the President and I talked a lot about the ongoing relief efforts. We thanked the government for their hard work, and I told him the American people will stand with these folks.

Thank you all very much. WOODRUFF: President Bush in the Oval Office. That meeting took place within the hour, the president meeting with the president of Indonesia, President Susilo Bambang Yudhoyono. Among other things, they discussed tsunami relief. They also discussed, as you heard, military-to-military cooperation.

And, you heard the president answer several questions from the press about his position on stem cell research, with the Congress moving to approve -- the House, yesterday, approving legislation that would expand federal research, federal funds going into research. The president, making clear his opposition to that.

Well, just a couple of minutes ago the markets closed on Wall Street, and I'm joined now by Kitty Pilgrim in New York with "The Dobbs Report." Hi, Kitty.

KITTY PILGRIM, CORRESPONDENT: Thanks a lot, Judy.

Well, stocks broadly lower on Wall Street, the Dow Industrials losing about 46 points. The NASDAQ, half a percent lower, and that snaps an eight-day winning streak. One of the major reasons for the losses is oil. It jumped $1.31 to nearly $51 a barrel. Oil supplies fell last week. That news is what caused the market reaction there.

And finally, some kind of damage payments for Enron workers. That's four years after the debacle. The "Houston Chronicle" says $69 million will go to 20,000 people. That works out to $3,500 per person. That's not nearly enough to make up what most of those people lost.

Coming up on CNN, 6:00 p.m. Eastern on "LOU DOBBS TONIGHT," a tale of economic woe. Buffalo, New York, one city getting hurt by so- called free trade. Many companies there are struggling to stay alive.

(BEGIN VIDEO CLIP)

MARK GOLDMAN, AUTHOR "HIGH HOPES": ...dedicated to this community and they are not being given the tools or the hope to build on their energy.

(END VIDEO CLIP)

PILGRIM: Also tonight, a new survey found a major earthquake in Los Angeles would be the costliest in U.S. history with a potential for thousands of fatalities. We have a special report on this study. Plus, conservative columnist Ann Coulter gives us her take on North Korea's nuclear threat. Much more there, and also, an inside look at the Bush family with Kitty Kelley, with author of "The Family: The Real Story of the Bush Dynasty." We'll have all that and more, 6:00 Eastern, "LOU DOBBS TONIGHT." And Judy Woodruff's INSIDE POLITICS will return in just a moment.

(COMMERCIAL BREAK)

WOODRUFF: Welcome back to INSIDE POLITICS. "Webster's Dictionary" defines "extraordinary" as, quote, "beyond what is common or usual." How Senate Democrats will define it is another matter, a matter that will determine how long the crucial compromise over judges and filibusters will hold. Our senior political analyst Bill Schneider reads between the lines of the Senate deal.

(BEGIN VIDEOTAPE)

BILL SCHNEIDER, SR POLITICAL ANALYST: What does the filibuster compromise really mean? We'll find out when President Bush makes his first Supreme Court nomination. Then it will come down to two words.

SEN. HARRY REID (D-NV) MINORITY LEADER: There's nothing in anything that was done last night that prevents us from filibustering somebody that's extreme.

SCHNEIDER: Republicans have a different understanding. Didn't the Democrats just agree not to filibuster three staunchly conservative nominees?

SEN. LINDSEY GRAHAM (R) SOUTH CAROLINA: I can tell that you Judge Brown, Judge Pryor and Judge Owen are going to get strong bipartisan support, and the fact that you're conservative is no longer an extraordinary circumstance.

SCHNEIDER: Republicans believe the agreement makes it harder for Democrats to use the filibuster.

BRADFORD BERENSON, FMR. ASSOCIATE W.H. COUNSEL: We had reached a point where the Democrats were filibustering judicial nominees relatively routinely. I don't think they can get away with that any longer in light of this agreement.

SCHNEIDER: Why? Because while Democrats have retained the right to filibuster, Republicans have retained their right to pass the nuclear or Constitutional option that would ban judicial filibusters.

SEN. MIKE DEWINE (R) OHIO: Any one of us feels that any of the members are filibustering in circumstances that are not extraordinary, we have the right to vote to invoke the Constitutional option that we were about to vote on today.

SCHNEIDER: Remember the battles over Robert Bork (ph) in 1987 and Clarence Thomas in 1991? Next time, it could be worse.

BERENSON: The last time there was a Supreme Court confirmation battle was prior to the age of the internet, prior to the age of the bloggers, prior to the age of the 24-hour news cycle.

SCHNEIDER: In those earlier battles, the filibuster was not used and no one talked about the nuclear option. Now, both weapons are on the table. What's to prevent all hell from breaking loose?

SEN. BEN NELSON (D) NEBRASKA: The key is developing a mutual trust and respect and being guided by good faith.

(END VIDEOTAPE)

SCHNEIDER (on camera): Faith-based politics, well, that will be needed if the filibuster compromise is going to work.

WOODRUFF: Sure is, and remains to be seen.

SCHNEIDER: Yes.

WOODRUFF: We may not know until would he see who the president nominates for the first Supreme Court vacancy.

SCHNEIDER: That could come as early as this summer depending on whether a justice decides to retire.

WOODRUFF: Bill Schneider, thank you very much.

SCHNEIDER: Sure.

WOODRUFF: We appreciate it.

The governor of Massachusetts has had a change of heart. Coming up, we'll tell you what Mitt Romney is thinking, and what it may say about his presidential ambitions.

Plus, the stem cell debate online -- is a flash point on the Hill big on the blogosphere?

Also in our blog update, a murder mystery, solved.

(COMMERCIAL BREAK)

WOODRUFF: A potential challenger for Senator Hillary Clinton leads the headlines in our "Political Bytes." New York Republican attorney Ed Cox has filed the paper work to form an exploratory committee to challenge Senator Clinton in 2006. The move allows Cox to begin raising money while he considers the race. Ed Cox, you may recall, is the son-in-law of the late president Richard Nixon.

Here in Washington, Senator Charles Grassley has introduced legislation that would ban Medicare and Medicaid payments for Viagra. Without a ban Grassley says impotence drugs could cost the government $2 billion over the next ten years. Grassley's move comes just as the federal government alerted states not to cover the cost of impotence drugs for convicted sex offenders.

Massachusetts governor Mitt Romney appears to be backing away a little from his past support of the Roe versus Wade abortion decision. The move is prompting more speculation about a shift to the political right and a potential White House run. Discussing abortion with "USA Today" this week Romney said, quote, "Understand, over time, one's perspective changes somewhat. I'm in a different place than I was, probably in 1994 when I ran against Ted Kennedy, in my own views on that."

Well we'll have much more on Mitt Romney's political ambitions just ahead. Is he looking to the State House or the White House? I'll ask Chuck Todd of "The Hot Line" next.

(COMMERCIAL BREAK)

WOODRUFF: Massachusetts governor Mitt Romney has some big decisions to make in the months ahead. Should he run for reelection? Or should he run for president? Or should he try to do both? I recently discussed Romney's future with Chuck Todd the editor and chief of "The Hot Line." I started by asking him how Romney's presidential ambitions could affect his 2006 reelection.

(BEGIN VIDEOTAPE)

CHUCK TODD, THE HOT LINE: Well, everybody I've talked to that around Governor Romney has basically told him you can't do both. The way the presidential calendar is, your an announced candidate now January of 2007. You have to be in the race in January of 2007. That would take place before he would even be inaugurated for his second term. Let alone the fact that in order to get reelected in Massachusetts, you have you to run to the middle and that's no good for presidential politics.

So, the assumption is if he runs for reelection, he's not running for president. If he decides not to run for reelection that means he's running for president. And I think that's where you hear these different whispers. But he has been told he can't do both. It's politically impossible.

WOODRUFF: Talk about his strategy. I mean, if he does decide to go for it what states does he need to focus on?

TODD: He has two states that are assets, New Hampshire, because he's right next door. Of course, that can be both a help and a hindrance, because he's the assumed frontrunner there. But, of course, we have seen what has happened to John Kerry up and down the polls in 2004.

In Michigan, where his father was governor, his father of course ran for president himself, which is kind of unique with this field. We don't have a lot sons of former presidential candidates running in '08. But Michigan is an early primary. And that's a help.

But the one state that the whole campaign is banking on is South Carolina, because the Mormanism -- Romney being a Morman -- Mormanism has never played well in the South. And if he can break through that barrier of being a Morman and winning in the South Carolina primary, there's no way to stop him. And they realize it's a one-state campaign for Mitt Romney. It's South Carolina. It's Brigham Young versus Bob Jones, basically. And if he can somehow break through, he can do it. If he can't, he's not going to get the nomination.

WOODRUFF: The perception is, Chuck, that Mitt Romney has money. Does he? And how much difference?

TODD: He's got more money than I think anybody realizes. And than more places to raise money than any of the potential candidates. He made a ton of money with a Band Capital, a venture capital firm that found companies like Staples, an office supply store. He has got hundreds of millions of dollars, people assume.

In fact, I've talked to some people that say that he's going to be willing to maybe initially write a $25 million check to his presidential campaign and then start raising money.

Now, his faith is going to be an important organizing tool to raise money. And then, of course, the venture capitalist that he knows both in the west coast and the east coast -- Boston, a huge venture capital town.

So, he may be the most well funded of the candidates. But again it all comes down to he has a one-state strategy, because he has got to prove himself in South Carolina to see if the Mormanism thing is a hindrance or not.

WOODRUFF: Who are the people right now around him? Who is he listening to?

TODD: Well, his biggest presidential adviser is Mike Murphy who, of course, was an adviser to John McCain in 2000, very close to Arnold Schwarzenegger, also very close to Jeb Bush. And that's what is interesting, Murphy is sort of the person that's probably going to put together the presidential campaign, but that's assuming that McCain or Jeb don't run. If somehow McCain runs, it might mean that Romney's number one guy to put this whole thing together, Mike Murphy, might stay on the sidelines because, if Murphy's one thing, he's loyal to people he worked for and he doesn't like having to work against them, and that -- that, potentially, that's a potential hurdle for Romney.

(END VIDEOTAPE)

WOODRUFF: That would be interesting. Chuck Todd, he's editor of the "Hotline," an insider's political briefing. It is produced every day by the "National Journal," and you can go on line to NationalJournal.com for subscription information.

The bloggers, it turns out, are weighing in on the big stories here in Washington. Up next, we check in with our blog reporters to sample reaction to the stem cell debate and the Senate compromise over judicial nominees.

(COMMERCIAL BREAK) WOODRUFF: Citizens of the blogosphere, it turns out, are keeping a close watch on recent events here in Washington. Let's check in now with CNN political producer Abbi Tatton and Jacki Schechner, our blog reporter. Hi, Jacki.

JACKI SCHECHNER, BLOG REPORTER: Hey, Judy.

Plenty of people talking about President Bush's judicial nominee Priscilla Owen being confirmed today in the Senate. A lot of them, though, more specifically talking about the bipartisan compromise of a couple of days ago that led to this vote to happen, and, more specifically, a lot of people on the right still trying to figure out what exactly happened and find ways to explain it.

Interesting post -- J.T. over at WizBangBlog.com, a conservative blog. He's an essayist there, has a personal analogy we thought was really interesting. He calls it the "big guy's burden." He personally says that he is a large man, and throughout his life, was always trying to downplay his strengths so as not to appear intimidating to other people. He sees an analogy and parallel with himself and the Republican party in this respect, saying that "Republicans need to learn to be comfortable with their size. They need to discover how to use their power and authority without abusing it. They need to learn how to use the clout without abusing it." Interesting read.

ABBI TATTON, CNN POLITICAL PRODUCER: We talked yesterday about some of the early reaction from some of the conservative bloggers about the compromise and about Senator Frist. They were outraged and they haven't calmed down, now they've had time to digest the news.

This is from CaptainsQuartersblog. This is Ed Moristy (ph) here. He's saying that this falls squarely -- this a failure of leadership "falls squarely" at the end of Senator Frist, and says, "had Tom DeLay, for all his flaws, been in charge of the Senate this filibuster debate would have taken place in January and he would have won it."

SCHECHNER: In other Washington news, unrelated to this, but -- the House of Representatives has passed the Embryonic Stem Cell Research Bill and President Bush has threatened to veto that.

Lots of discussion about this, as we assume it will continue as it moves through the Senate, as well. But, over at TheYellowLine.blogspot.com, Alan Stewart Carl, posting from the middle in Washington, D.C., a centrist blog, says -- brings up an interesting point, that stem cell research right now is OK and legal to be privately funded, so why is it unethical if it were federally funded, and wonders where President Bush is coming from on the ethics issue of this, just one of the many discussions having to do with stem cell research.

TATTON: Moving away from politics, now. This entry last night from Glen Reynolds at InstaPundit that caught our eye: "Blog Entry Solves Murder," referring to a site here from a young man named Simon Ng in Queens, New York, who was posting on May 12th of this year, regular things, missing his Japanese class, and also about the fact that his sister's former boyfriend was in his house, wondering what he was doing there, wishing that he would leave. Now, later on that day Simon Ng and his sister were found murdered. As a result of this blog post, police were able to place the former boyfriend at the scene and that man has subsequently been charged with the murders.

SCHECHNER: Taking this one step further, over at the Volate (ph) Conspiracy, it's Volate.com (ph), Orren Current (ph), an associate law professor at George Washington University, posts what he calls an extra credit question for law students and litigators.

"Is a computer print-out of the blog post admissible at trial?" Two issues came up in the comment session, hearsay and authentication. We emailed Orren Current, and Professor Current had this to say.

"The answer is not clear. The question, can the government make a good case if the post actually -- was actually written by the victim. If they can do that, then it likely would be admitted in court."

TATTON: Another story that's attracting a lot of attention today is this sign that was posted outside a North Carolina Baptist church, "The Koran needs to be flushed." You can hear -- you can see it many places, hear at JaysBrain.blogspot.com. The pastor of that church is not backing down. That's the Danieltown Baptist church in North Carolina. The pastor defending his decision to put the sign outside the church, but bloggers all around the country are reacting to this with outrage.

SCHECHNER: Just a mild post, moral contradictions, Nathan in Richmond, Virginia -- "What is wrong with North Carolina Baptists?" He's got a picture of the sign, saying "interesting to note that it's only 75 miles southeast of Waynesville, home of the East Waynesville Baptist church excommunication saga." You may remember the people who were asked to leave the church because they voted Democrat.

TATTON: Some people pointing out that this is not the opinion of all North Carolina Baptists, whatsoever. I was interested by this one, Journal.BiblicalRecorder.com. This is a newsletter for North Carolina Baptists that's been around for over a hundred years. The blog has only been around for a week or so, but Tony Cartilage is the editor there and he's posting about this, saying that, "this is not the opinion of everyone there." And he's also digging into the pastor, that's Creighton -- Creighton Lovelace is his name who has defended his sign, saying this is a man just making a name for himself. He's been looking at his resume, his past, and this is what he says over at the Biblical Recorder. "The calculated offensiveness of his roadside sign, trying to tap into an already simmering worldwide outrage offers the ultimate shortcut."

SCHECHNER: And, finally, a new welcome to the world of political blogging, to 27 members of the Oregon House Democratic caucus. They launched their blog two days ago and they just started to post, and it's called OregonHouseDemocrats.blog.com. SwingStateProject.com giving them kudos, saying, "three posts so far, all informational and I don't even see anyone asking for money," Judy. So, more politicians now getting into the world of blogging. WOODRUFF: More politicians and blogging from all over the country. It's one nice reminder that it's not just Washingtonians who indulge. OK, Abbi, Jacki, thank you both. We'll see you tomorrow.

And a reminder to our audience, tomorrow, we'll have much to talk about with regard to the economy. We're going to be interviewing the secretary of the treasury, John Snow. He'll be our guest on INSIDE POLITICS. That's it for today's Wednesday edition. I'm Judy Woodruff. Thanks for joining us; "CROSSFIRE" starts right now.

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